A. Schulman Reports Fiscal 2015 Third Quarter Results

- Adjusted operating income growth grew by 32.1%, excluding the impact of foreign currency, in the Company's fiscal 2015 third quarter

- Quarterly cash flow from operating activities improved by 26% compared with the prior year period

- On June 1, the acquisition of HGGC Citadel Plastics Holdings, Inc. ("Citadel"), for approximately $800 million was completed; the transaction:

- - Almost doubles U.S. revenue, thus balancing Company's geographic footprint

- - Provides a new growth platform with industry-leading, high-margin specialty engineered composites business

- - Is expected to be accretive in the first 12 months of ownership

- - Will achieve approximately $25 million in synergies within 18 months

- Fiscal 2015 adjusted net income guidance range updated to reflect the Citadel acquisition and related financing activities

Jul 06, 2015, 16:47 ET from A. Schulman, Inc.

AKRON, Ohio, July 6, 2015 /PRNewswire/ -- A. Schulman, Inc. (Nasdaq: SHLM) announced today earnings for the fiscal 2015 third quarter ended May 31, 2015.

Bernard Rzepka, president and chief executive officer, said, "I am excited to report another quarter of improved operating profitability at A. Schulman, a clear sign that our strategic initiatives to transform our Company into a specialty plastics materials leader are bearing fruit. In 2010 we set a challenging target of 6.2 cents of operating profit per pound by the end of fiscal 2015 to reflect our commitment to this transformational process. In the third quarter we achieved adjusted operating profit per pound of 6 cents, and if we held the Euro to USD currency rate at the same level that was in place when the target was established this metric would have been 7 cents. We continue to overcome the slow growth and foreign exchange environment by controlling what we can control and by focusing on our strategic initiatives, and as a result we were able to sequentially boost our gross margins across nearly every segment to deliver near record results. The steady performance improvement that we've accomplished this year, despite the many external challenges, gives us considerable confidence that our dedicated team will execute our strategy, deliver further profitable growth, and achieve our long term earnings goals.

"We are excited to have completed the acquisition of Citadel on June 1, and welcome their 1,200 talented associates to the A. Schulman team. This strategic acquisition greatly enhances our product scope, regional scale and efficiencies, and provides balance to our geographic footprint. With Citadel on board we are focused on leveraging the strength of the combined business, and expanding our growth potential," added Rzepka.

Joseph Levanduski, executive vice president & chief financial officer, said, "We have put in place a new capital structure that provides flexibility, while taking advantage of the favorable conditions that currently exist in the financial markets. This structure puts us in a leverage environment that will be higher than we have experienced in the recent past, but we are confident in our ability to de-lever in a prudent and timely fashion. By combining two organizations that generate strong cash flow from operations, while driving synergies and executing our Smart Savings program, we will not only be able to de-lever to our stated goal of 2.5x net leverage within a reasonable period of time, but we will also be able to support our strategic and organic growth initiatives."

Fiscal Third-Quarter Results Consolidated net sales for the fiscal 2015 third quarter were $560.9 million, compared with $645.7 million in the same prior-year quarter. Of the $84.8 million change, foreign currency translation accounted for $91.4 million of the decrease. Net sales from plants acquired in 2014, which includes A. Schulman's legacy volume consolidated during the integration process, contributed $33.9 million of revenue during the quarter. Adjusted gross margin in the third quarter as a percent of net sales improved to 16.2% compared with 14.3% in the prior-year period.

The Company reported a net loss from continuing operations of $0.34 per diluted share. On an adjusted basis, excluding financing, restructuring and acquisitions-related costs, the Company generated net income of $0.72 per diluted share.

Europe, Middle East and Africa ('EMEA") net sales were $326.3 million compared with $413.8 million in the same prior-year period. Excluding the unfavorable impact of foreign currency translation of $79.7 million, net sales declined by 1.9%, primarily due to lower volumes in the engineered plastics and distribution services product families, partially offset by double digit volume growth in the masterbatch solutions product family. EMEA adjusted gross profit was $51.7 million. Excluding the negative impact of foreign currency translation of $11.3 million, adjusted gross profit increased by $6.2 million, or 10.9%, primarily due to improved product mix as well as the incremental contribution of the Specialty Plastics acquisition.

Net sales for the U.S. and Canada ("USCAN") were $137.1 million, an increase of 4.1% in the third quarter compared with the same prior-year period. The incremental net sales were partially offset by lower net sales of $11.6 million in the specialty powders product family as a result of weaker oilfield services demand. The Specialty Plastics acquisition contributed $19.6 million of net sales growth during the quarter. USCAN adjusted gross profit was $22.1 million, a decrease of $1.7 million from the same prior-year period. The benefits of the recent Specialty Plastics acquisition and related integration were more than offset by unfavorable product mix.

Latin America's ("LATAM") net sales for the quarter were $44.8 million, a decrease of $4.9 million compared with the same prior-year period. Excluding the unfavorable impact of foreign currency translation of $8.5 million, net sales increased 7.2%. LATAM adjusted gross profit was $9.3 million, an increase of $4.9 million or 108.5% from the comparable period last year primarily due to the benefits of improved product mix and operating cost.

Asia Pacific ("APAC") net sales were $52.7 million, an increase of $2.2 million or 4.3% compared with the same prior-year period. Incremental sales from the 2014 Compco acquisition were offset by the negative impact from foreign currency translation. APAC adjusted gross profit was $7.8 million, an increase of $0.7 million compared with the prior-year period. Gross profit benefited from the positive contribution of the Compco acquisition and increased organic volume.

Working Capital/Cash Flow Cash provided from operations was $56.3 million in the nine months ended May 31, 2015, an improvement of $21.2 million or 60.6% over the comparable prior year period. Working capital days decreased by one day to 59 days in the third quarter of fiscal 2015 versus the comparable period in the prior year, and representing an 8-day improvement from the end of the second quarter of fiscal 2015.

Capital expenditures for the nine months ended May 31, 2015 were $32.7 million compared with $24.1 million last year. These expenditures were primarily related to strategic investments in the Company's global manufacturing facilities and technical innovation and collaboration centers focused on organic growth and new product development. During the nine months ended May 31, 2015, the Company declared and paid quarterly cash dividends of $18.1 million, or $0.615 per common share consistent with its ongoing strategy of providing an attractive yield to shareholders in addition to share price appreciation.

Year-to-Date Results Net sales for the nine months ended May 31, 2015 were $1.7 billion, compared with $1.8 billion for the same prior-year period. Of the $101.4 million decrease in net sales, foreign currency translation accounted for $177.3 million of this change. Acquisitions contributed $130.0 million in net sales during the nine month period.

Operating income was $49.7 million, a decrease of $9.4 million compared with the same prior-year period. Total operating income before certain items was $79.8 million, an increase of $7.6 million or 10.6% compared with last year. Excluding the negative impact of foreign currency translation, total operating income before certain items increased 23.5% versus the comparable period. The growth in total operating income before certain items included the contribution from recent acquisitions of $12.4 million and the strategic focus on improving operating profit per pound, partially offset by the negative impact of foreign currency translation of $9.3 million.

Citadel and Refinancing Actions On June 1, 2015, A. Schulman completed the previously announced acquisition of HGGC Citadel Plastics Holdings, Inc. for approximately $800 million. The Company anticipates the transaction will be accretive in the first 12 months of ownership and expects to realize approximately $25 million in synergies within the next 18 months. The Company financed the acquisition, with a component of this financing occurring in the third quarter in anticipation of the June 1 close. The third quarter of fiscal 2015 included interest expense of approximately $0.4 million or a $0.01 per diluted share impact resulting from the issuance of $375 million of Senior Notes. The cash raised during the third quarter from the Senior Notes is reflected as restricted cash on the Company's balance sheet as of May 31, 2015.

Additionally, the Company elected to restructure its capital structure in tandem with this acquisition financing.  As a component of this action, on May 4, 2015, the Company issued $125 million of convertible special stock bearing a 6% dividend rate. Earnings per diluted share for the third quarter of fiscal 2015 included $0.6 million of dividends or approximately $0.02 per diluted share impact related to the convertible special stock.

Business Outlook Rzepka stated, "Our fiscal 2015 adjusted net income guidance previously provided of $2.50 to $2.55 per diluted share represented significant growth over our fiscal 2014 results, excluding any impact from the then pending acquisition of Citadel. While the Citadel acquisition has occurred, and related financing actions taken, it is important to take note that the previous guidance range is achievable excluding the dilution expected in our fourth quarter related to these strategic long-term actions.

"We believe that the fiscal 2015 dilution related to the Citadel acquisition, including the $0.01 per diluted share negative impact on our third quarter results, will be approximately $0.05 per diluted share. Additionally, the dividend on the convertible special stock will impact the calculation of diluted earnings per share by approximately $0.08 per share in fiscal 2015, including the $0.02 impact on our third quarter results," he noted.

"The combination of our previous guidance, updated for the fiscal 2015 dilution from the Citadel acquisition and convertible special stock dividend results in our adjusted guidance range of $2.37 to $2.42 per diluted share.

"Our team is committed to profitable growth and achieving our fiscal 2018 targets. As we integrate Citadel, and meet or exceed our $25 million synergy target, we are confident that the accretive nature of this acquisition, combined with our operating income growth, will provide a significant return to our shareholders. We look forward to reporting our fiscal 2015 results, and providing fiscal 2016 earnings guidance, at the end of October. We are focused and committed to achieving our long-term strategic goals," Rzepka added.

Conference Call on the Web A live Internet broadcast of A. Schulman's conference call regarding fiscal 2015 third-quarter earnings can be accessed at 10:00 a.m. Eastern Time on Tuesday, July 7, 2015, on the Company's website, www.aschulman.com. An archived replay of the call will also be available on the website.

Investor Presentation Materials Senior executives of the Company may participate in meetings with analysts and investors throughout the fiscal year. The Company has posted presentation materials, portions of which may be used during such meetings, in the Investors section of its website at www.aschulman.com. The presentation will remain on the website as long as it is in use.

About A. Schulman, Inc. A. Schulman, Inc. is a leading international supplier of high-performance plastic compounds and resins headquartered in Akron, Ohio. Since 1928, the Company has been providing innovative solutions to meet its customers' demanding requirements. The Company's customers span a wide range of markets such as packaging, mobility, building & construction, electronics & electrical, agriculture, personal care & hygiene, sports, leisure & home, custom services and others. The Company employs approximately 5,000 people and has 60 manufacturing facilities globally. A. Schulman reported net sales of approximately $2.5 billion for the fiscal year ended August 31, 2014. Additional information about A. Schulman can be found at www.aschulman.com.

Use of Non-GAAP Financial Measures This release includes certain financial information determined by methods other than in accordance with accounting principles generally accepted in the United States ("GAAP"). These non-GAAP financial measures include segment gross profit, SG&A expenses excluding certain items, segment operating income, operating income before certain items, net income excluding certain items, net income per diluted share excluding certain items and adjusted EBITDA, as discussed further in the Reconciliation of GAAP and Non-GAAP Financial Measures below. These non-GAAP financial measures are considered relevant to aid analysis and understanding of the Company's results and business trends. However, non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures, and tables included in this release reconcile each non-GAAP financial measure with the most directly comparable GAAP financial measure. The most directly comparable GAAP financial measures for these purposes are gross profit, SG&A expenses, operating income, net income and net income per diluted share. The Company's non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures, and should be read only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP.

While the Company believes that these non-GAAP financial measures provide useful supplemental information to investors, there are very significant limitations associated with their use. These non-GAAP financial measures are not prepared in accordance with GAAP, may not be reported by all of the Company's competitors and may not be directly comparable to similarly titled measures of the Company's competitors due to potential differences in the exact method of calculation. The Company compensates for these limitations by using these non-GAAP financial measures as supplements to GAAP financial measures and by reviewing the reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measures.

Cautionary Statements A number of the matters discussed in this document that are not historical or current facts deal with potential future circumstances and developments and may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historic or current facts and relate to future events and expectations. Forward-looking statements contain such words as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. Forward-looking statements are based on management's current expectations and include known and unknown risks, uncertainties and other factors, many of which management is unable to predict or control, that may cause actual results, performance or achievements to differ materially from those expressed or implied in the forward-looking statements. Important factors that could cause actual results to differ materially from those suggested by these forward-looking statements, and that could adversely affect the Company's future financial performance, include, but are not limited to, the following:

  • worldwide and regional economic, business and political conditions, including continuing economic uncertainties in some or all of the Company's major product markets or countries where the Company has operations;
  • the effectiveness of the Company's efforts to improve operating margins through sales growth, price increases, productivity gains, and improved purchasing techniques;
  • competitive factors, including intense price competition;
  • fluctuations in the value of currencies in areas where the Company operates;
  • volatility of prices and availability of the supply of energy and raw materials that are critical to the manufacture of the Company's products, particularly plastic resins derived from oil and natural gas;
  • changes in customer demand and requirements;
  • effectiveness of the Company to achieve the level of cost savings, productivity improvements, growth and other benefits anticipated from acquisitions, joint ventures and restructuring initiatives;
  • escalation in the cost of providing employee health care and retirement benefits;
  • uncertainties regarding the resolution of pending and future litigation and other claims;
  • the performance of the global automotive market as well as other markets served;
  • further adverse changes in economic or industry conditions, including global supply and demand conditions and prices for products;
  • operating problems with our information systems as a result of system security failures such as viruses, cyber-attacks or other causes;
  • the impact of the indebtedness incurred to finance the transaction;
  • integration of the business of Citadel with our existing business, including the risk that the integration will be more costly or more time consuming and complex than anticipated;
  • our ability to achieve the anticipated synergies, cost savings and other benefits from the acquisition of Citadel;
  • transaction and acquisition-related costs incurred in connection with the acquisition of Citadel and related transactions; and
  • substantial time devoted by management to the integration of the Citadel acquisition.

The risks and uncertainties identified above are not the only risks the Company faces. Additional risk factors that could affect the Company's performance are set forth in the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2014, as amended and superseded in part by the Company's Current Report on Form 8-K filed on April 27, 2015. In addition, risks and uncertainties not presently known to the Company or that it believes to be immaterial also may adversely affect the Company. Should any known or unknown risks or uncertainties develop into actual events, or underlying assumptions prove inaccurate, these developments could have material adverse effects on the Company's business, financial condition and results of operations.

SHLM_ALL

       

A. SCHULMAN, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Three months ended May 31,

Nine months ended May 31,

2015

2014

2015

2014

Unaudited

(In thousands, except per share data)

Net sales

$

560,858

$

645,735

$

1,718,206

$

1,819,640

Cost of sales

470,101

553,771

1,462,531

1,574,269

Selling, general and administrative expenses

64,842

65,536

195,482

181,647

Restructuring expense

2,649

1,078

10,530

4,583

Asset impairment

104

Operating income

23,266

25,350

49,663

59,037

Interest expense

2,618

1,433

7,288

6,112

Bridge financing fees

18,750

18,750

Foreign currency transaction (gains) losses

857

(28)

3,097

2,120

Other (income) expense, net

(335)

(64)

(900)

(478)

Gain on early extinguishment of debt

(1,290)

Income (loss) from continuing operations before taxes

1,376

24,009

22,718

51,283

Provision (benefit) for U.S. and foreign income taxes

10,344

4,662

18,801

12,657

Income (loss) from continuing operations

(8,968)

19,347

3,917

38,626

Income (loss) from discontinued operations, net of tax

(18)

(23)

(86)

2,979

Net income (loss)

(8,986)

19,324

3,831

41,605

Noncontrolling interests

(343)

(233)

(890)

(584)

Net income (loss) attributable to A. Schulman, Inc.

(9,329)

19,091

2,941

41,021

Convertible special stock dividends

(563)

(563)

Net income (loss) available to A. Schulman, Inc. common stockholders

$

(9,892)

$

19,091

$

2,378

$

41,021

Weighted-average number of shares outstanding:

Basic

29,219

29,081

29,125

29,052

Diluted

29,219

29,375

29,547

29,300

Basic earnings per share available to A. Schulman, Inc. common stockholders

Income (loss) from continuing operations

$

(0.34)

$

0.66

$

0.08

$

1.31

Income (loss) from discontinued operations

0.10

Net income (loss) available to A. Schulman, Inc. common stockholders

$

(0.34)

$

0.66

$

0.08

$

1.41

Diluted earnings per share available to A. Schulman, Inc. common stockholders

Income (loss) from continuing operations

$

(0.34)

$

0.65

$

0.08

$

1.30

Income (loss) from discontinued operations

0.10

Net income (loss) available to A. Schulman, Inc. common stockholders

$

(0.34)

$

0.65

$

0.08

$

1.40

Cash dividends per common share

$

0.205

$

0.200

$

0.615

$

0.600

     

A. SCHULMAN, INC.

CONSOLIDATED BALANCE SHEETS

May 31,  2015

August 31,  2014

Unaudited 

(In thousands)

ASSETS

Current assets:

Cash and cash equivalents

$

107,043

$

135,493

Restricted cash

378,509

Accounts receivable, less allowance for doubtful accounts of $9,537 at May 31, 2015 and $10,844 at August 31, 2014

357,688

384,444

Inventories

270,227

292,141

Prepaid expenses and other current assets

38,867

40,473

Total current assets

1,152,334

852,551

Property, plant and equipment, at cost:

Land and improvements

25,568

28,439

Buildings and leasehold improvements

143,002

160,858

Machinery and equipment

372,030

398,563

Furniture and fixtures

31,896

41,255

Construction in progress

23,015

16,718

Gross property, plant and equipment

595,511

645,833

Accumulated depreciation

358,979

391,912

Net property, plant and equipment

236,532

253,921

Deferred charges and other noncurrent assets

83,149

65,079

Goodwill

191,489

202,299

Intangible assets, net

119,508

138,634

Total assets

$

1,783,012

$

1,512,484

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

293,203

$

314,957

U.S. and foreign income taxes payable

7,350

6,385

Accrued payroll, taxes and related benefits

46,513

54,199

Other accrued liabilities

78,558

46,054

Short-term debt

14,290

31,748

Total current liabilities

439,914

453,343

Long-term debt

607,585

339,546

Pension plans

110,498

129,949

Deferred income taxes

20,681

23,826

Other long-term liabilities

25,571

29,369

Total liabilities

1,204,249

976,033

Commitments and contingencies

Stockholders' equity:

Common stock, $1 par value, authorized - 75,000 shares, issued - 48,367 shares at May 31, 2015 and 48,185 shares at August 31, 2014

48,367

48,185

Convertible special stock, no par value

120,296

Additional paid-in capital

274,138

268,545

Accumulated other comprehensive income (loss)

(81,097)

(16,691)

Retained earnings

591,781

606,898

Treasury stock, at cost, 19,078 shares at May 31, 2015 and 18,973 shares at August 31, 2014

(383,148)

(379,894)

Total A. Schulman, Inc.'s stockholders' equity

570,337

527,043

Noncontrolling interests

8,426

9,408

Total equity

578,763

536,451

Total liabilities and equity

$

1,783,012

$

1,512,484

      

A. SCHULMAN, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine months ended May 31,

2015

2014

Unaudited

(In thousands)

Operating from continuing and discontinued operations:

Net income

$

3,831

$

41,605

Adjustments to reconcile net income to net cash provided from (used in) operating activities:

Depreciation

26,481

24,751

Amortization

11,899

10,308

Bridge financing fees

18,750

Deferred tax provision (benefit)

(1,143)

(3,182)

Pension, postretirement benefits and other compensation

8,318

9,157

Restricted stock compensation - CEO transition costs, net of cash

4,789

Asset impairment

104

Gain on sale of assets from discontinued operations

(3,344)

Changes in assets and liabilities, net of acquisitions:

Accounts receivable

(13,610)

(26,048)

Inventories

(13,309)

(15,330)

Accounts payable

9,599

2,847

Income taxes

2,598

204

Accrued payroll and other accrued liabilities

4,776

260

Other assets and long-term liabilities

(6,698)

(6,296)

Net cash provided from (used in) operating activities

56,281

35,036

Investing from continuing and discontinued operations:

Expenditures for property, plant and equipment

(32,662)

(24,126)

Investment in equity investees

(12,456)

Proceeds from the sale of assets

1,411

5,255

Restricted cash

(3,509)

Business acquisitions, net of cash

(6,698)

(115,624)

Net cash provided from (used in) investing activities

(53,914)

(134,495)

Financing from continuing and discontinued operations:

Cash dividends paid to common stockholders

(18,058)

(17,717)

Increase (decrease) in short-term debt

(12,995)

3,747

Borrowings on long-term debt

255,196

703,141

Repayments on long-term debt including current portion

(353,647)

(609,501)

Payment of debt issuance costs

(1,782)

Noncontrolling interests' contributions (distributions)

(1,750)

Issuances of stock, common and treasury

231

403

Issuances of convertible special stock, net

120,296

Redemptions of common stock

(4,999)

(361)

Purchases of treasury stock

(3,335)

(1,116)

Net cash provided from (used in) financing activities

(19,061)

76,814

Effect of exchange rate changes on cash

(11,756)

(605)

Net increase (decrease) in cash and cash equivalents

(28,450)

(23,250)

Cash and cash equivalents at beginning of period

135,493

134,054

Cash and cash equivalents at end of period

$

107,043

$

110,804

Non-cash Activity:

Senior Notes funding held in restricted cash

$

375,000

$

Unpaid debt issuance costs

$

11,116

$

     

A. SCHULMAN, INC.

Reconciliation of GAAP and Non-GAAP Financial Measures

Three months ended May 31, 2015

Cost of Sales

Gross Margin

SG&A

Restructuring Expense

Operating Income

Operating Income per Pound

Non Operating (Income) Expense

Income Tax Expense (benefit)

Net Income Available to A. Schulman, Inc. Common Stockholders

Diluted EPS

(In thousands, except for %'s, per pound and per share data)

As reported

$

470,101

16.2

%

$

64,842

$

2,649

$

23,266

$

0.043

$

21,890

$

10,344

$

(9,892)

$

(0.34)

Certain items:

Acquisition related interest expenses (1)

(19,134)

19,134

0.66

Accelerated depreciation (5)

(29)

29

29

Costs related to acquisitions and integrations (2)

(59)

(3,531)

3,590

29

3,561

0.12

Restructuring and related costs (3)

(49)

(3,239)

(2,649)

5,937

1,144

4,793

0.16

Tax benefits (charges) (8)

(3,559)

3,559

0.12

Loss (income) from discontinued operations

18

Total certain items

(137)

%

(6,770)

(2,649)

9,556

0.017

(19,134)

(2,386)

31,094

1.06

As Adjusted

$

469,964

16.2

%

$

58,072

$

$

32,822

$

0.060

$

2,756

$

7,958

$

21,202

$

0.72

Percentage of Revenue

10.4

%

5.9

%

3.8

%

Effective Tax Rate

26.5

%

Three months ended May 31, 2014

Cost of Sales

Gross Margin

SG&A

Restructuring Expense

Operating Income

Operating Income per Pound

Non Operating (Income) Expense

Income Tax Expense (benefit)

Net Income Available to A. Schulman, Inc. Common Stockholders

Diluted EPS

(In thousands, except for %'s, per pound and per share data)

As reported

$

553,771

14.2

%

$

65,536

$

1,078

$

25,350

$

0.046

$

1,341

$

4,662

$

19,091

$

0.65

Certain items:

Costs related to acquisitions and integrations (2)

(888)

888

16

872

0.03

Restructuring and related costs (3)

(149)

(933)

(1,078)

2,160

320

1,840

0.06

Loss (income) from discontinued operations

23

Total certain items

(149)

0.1

%

(1,821)

(1,078)

3,048

0.006

336

2,735

0.09

As Adjusted

$

553,622

14.3

%

$

63,715

$

$

28,398

$

0.052

$

1,341

$

4,998

$

21,826

$

0.74

Percentage of Revenue

9.9

%

4.4

%

3.4

%

Effective Tax Rate

18.5

%

      

Nine months ended May 31, 2015

Cost of Sales

Gross Margin

SG&A

Restructuring Expense

Operating Income

Operating Income per Pound

Non Operating (Income) Expense

Income Tax Expense (benefit)

Net Income Available to A. Schulman, Inc. Common Stockholders

Diluted EPS

(In thousands, except for %'s, per pound and per share data)

As reported

$

1,462,531

14.9

%

$

195,482

$

10,530

$

49,663

$

0.031

$

26,945

$

18,801

$

2,378

$

0.08

Certain items:

Acquisition related interest expenses (1)

(19,134)

19,134

0.65

Accelerated depreciation (5)

(327)

327

327

0.01

Costs related to acquisitions and integrations (2)

(174)

(7,798)

7,972

307

7,665

0.26

Restructuring and related costs (3)

(347)

(4,426)

(10,530)

15,303

3,146

12,157

0.41

CEO transition costs (4)

(6,167)

6,167

6,167

0.21

Inventory step-up (6)

(341)

341

102

239

0.01

Gain on early extinguishment of debt (7)

1,290

(428)

(862)

(0.03)

Tax benefits (charges) (8)

(3,841)

3,841

0.13

Loss (income) from discontinued operations

86

Total certain items

(1,189)

%

(18,391)

(10,530)

30,110

0.019

(17,844)

(714)

48,754

1.65

As Adjusted

$

1,461,342

14.9

%

$

177,091

$

$

79,773

$

0.050

$

9,101

$

18,087

$

51,132

$

1.73

Percentage of Revenue

10.3

%

4.6

%

3.0

%

Effective Tax Rate

20.4

%

Nine months ended May 31, 2014

Cost of Sales

Gross Margin

SG&A

Restructuring Expense

Operating Income

Operating Income per Pound

Non Operating (Income) Expense

Income Tax Expense (benefit)

Net Income Available to A. Schulman, Inc. Common Stockholders

Diluted EPS

(In thousands, except for %'s, per pound and per share data)

As reported

$

1,574,269

13.5

%

$

181,647

$

4,583

$

59,037

$

0.038

$

7,754

$

12,657

$

41,021

$

1.40

Certain items:

Costs related to acquisitions and integrations (2)

(34)

(3,343)

3,377

(8)

141

3,244

0.11

Restructuring and related costs (3)

(649)

(3,090)

(4,583)

8,322

(290)

920

7,692

0.26

Asset write-downs (5)

(108)

(104)

212

34

178

0.01

Inventory step-up (6)

(1,199)

1,199

98

1,101

0.04

Tax benefits (charges) (8)

427

(427)

(0.02)

Loss (income) from discontinued operations

(2,979)

(0.10)

Total certain items

(1,990)

0.1

%

(6,537)

(4,583)

13,110

0.009

(298)

1,620

8,809

0.30

As Adjusted

$

1,572,279

13.6

%

$

175,110

$

$

72,147

$

0.047

$

7,457

$

14,277

$

49,830

$

1.70

Percentage of Revenue

9.6

%

4.0

%

2.7

%

Effective Tax Rate

17.9

%

1 - Primarily relates to $18.8 million in bridge financing fees.

2 - Costs related to acquisitions and integrations primarily include third party professional, legal, IT and other expenses associated with successful and unsuccessful full or partial acquisition and divestiture/dissolution transactions, as well as certain employee-related expenses such as travel, one-time bonuses and post-acquisition severance separate from a formal restructuring plan.

3 - Restructuring and related costs include items such as employee severance charges, lease termination charges, curtailment gains/losses, other employee termination costs and charges related to the reorganization of the legal entity structure.

4 - CEO transition costs represent a one-time charge for the modification and accelerated vesting upon retirement of the outstanding equity compensation awards granted to Joseph M. Gingo in 2013 and 2014.

5 - Asset write-downs primarily relate to asset impairments and accelerated depreciation.

6 - Inventory step-up costs represent the amortization of adjustments to fair value of inventory acquired for acquisition purchase accounting.

7 - Represents a pre-tax net gain of $1.3 million on the early extinguishment of debt.

8 - Tax benefits (charges) represent the Company's quarterly non-GAAP tax based on the overall estimated annual non-GAAP effective tax rates.

     

A. SCHULMAN, INC.

ADJUSTED EBITDA RECONCILIATION

Three months ended May 31,

Nine months ended May 31,

2015

2014

2015

2014

Unaudited

(In thousands)

Net income available to A. Schulman, Inc. common stockholders, as adjusted (1)

$

21,202

$

21,826

$

51,132

$

49,830

Interest expense

2,618

1,433

7,288

6,112

Provision for U.S. and foreign income taxes, as adjusted

7,958

4,998

18,087

14,277

Depreciation

8,491

8,332

26,481

24,751

Amortization

3,628

3,639

11,899

10,308

EBITDA, as adjusted

$

43,897

$

40,228

$

114,887

$

105,278

1 - For a list of certain items to reconcile between "net income available to A. Schulman, Inc. common stockholders" and "net income available to A. Schulman, Inc. common stockholders, as adjusted", refer to the reconciliation of GAAP and non-GAAP financial measures.

     

A. SCHULMAN, INC.

SUPPLEMENTAL SEGMENT INFORMATION

Net Sales

Pounds Sold

Three months ended May 31,

EMEA

2015

2014

$ Change

% Change

2015

2014

Lbs. Change

% Change

(In thousands, except for %'s)

Custom Performance Color

$

30,475

$

39,505

$

(9,030)

(22.9)

%

12,473

13,114

(641)

(4.9)

%

Masterbatch Solutions

105,706

122,450

(16,744)

(13.7)

%

105,809

94,228

11,581

12.3

%

Engineered Plastics

95,210

123,634

(28,424)

(23.0)

%

71,923

77,649

(5,726)

(7.4)

%

Specialty Powders

37,903

47,533

(9,630)

(20.3)

%

46,997

47,193

(196)

(0.4)

%

Distribution Services

56,961

80,666

(23,705)

(29.4)

%

85,689

96,600

(10,911)

(11.3)

%

Total EMEA

$

326,255

$

413,788

$

(87,533)

(21.2)

%

322,891

328,784

(5,893)

(1.8)

%

Net Sales

Pounds Sold

Three months ended May 31,

USCAN

2015

2014

$ Change

% Change

2015

2014

Lbs. Change

% Change

(In thousands, except for %'s)

Custom Performance Color

$

11,209

$

8,817

$

2,392

27.1

%

3,925

2,619

1,306

49.9

%

Masterbatch Solutions

37,077

34,369

2,708

7.9

%

51,659

53,248

(1,589)

(3.0)

%

Engineered Plastics

48,172

34,617

13,555

39.2

%

31,897

21,248

10,649

50.1

%

Specialty Powders

22,914

34,552

(11,638)

(33.7)

%

33,563

44,139

(10,576)

(24.0)

%

Distribution Services

17,708

19,290

(1,582)

(8.2)

%

21,437

19,735

1,702

8.6

%

Total USCAN

$

137,080

$

131,645

$

5,435

4.1

%

142,481

140,989

1,492

1.1

%

Net Sales

Pounds Sold

Three months ended May 31,

LATAM

2015

2014

$ Change

% Change

2015

2014

Lbs. Change

% Change

(In thousands, except for %'s)

Custom Performance Color

$

1,054

$

1,014

$

40

3.9

%

395

502

(107)

(21.3)

%

Masterbatch Solutions

23,769

24,182

(413)

(1.7)

%

16,789

15,648

1,141

7.3

%

Engineered Plastics

11,889

13,607

(1,718)

(12.6)

%

9,196

9,614

(418)

(4.3)

%

Specialty Powders

8,109

10,951

(2,842)

(26.0)

%

7,177

9,270

(2,093)

(22.6)

%

Distribution Services

N/A

N/A

Total LATAM

$

44,821

$

49,754

$

(4,933)

(9.9)

%

33,557

35,034

(1,477)

(4.2)

%

Net Sales

Pounds Sold

Three months ended May 31,

APAC

2015

2014

$ Change

% Change

2015

2014

Lbs. Change

% Change

(In thousands, except for %'s)

Custom Performance Color

$

2,567

$

876

$

1,691

193.0

%

1,615

738

877

118.8

%

Masterbatch Solutions

21,375

21,272

103

0.5

%

22,331

19,651

2,680

13.6

%

Engineered Plastics

26,454

23,803

2,651

11.1

%

19,479

15,788

3,691

23.4

%

Specialty Powders

2,207

4,085

(1,878)

(46.0)

%

2,617

3,651

(1,034)

(28.3)

%

Distribution Services

99

512

(413)

(80.7)

%

135

619

(484)

(78.2)

%

Total APAC

$

52,702

$

50,548

$

2,154

4.3

%

46,177

40,447

5,730

14.2

%

    

Net Sales

Pounds Sold

Nine months ended May 31,

EMEA

2015

2014

$ Change

% Change

2015

2014

Lbs. Change

% Change

(In thousands, except for %'s)

Custom Performance Color

$

93,168

$

111,490

$

(18,322)

(16.4)%

34,752

37,086

(2,334)

(6.3)

%

Masterbatch Solutions

321,885

336,977

(15,092)

(4.5)%

296,207

262,785

33,422

12.7

%

Engineered Plastics

294,179

360,983

(66,804)

(18.5)%

207,104

222,411

(15,307)

(6.9)

%

Specialty Powders

114,637

137,941

(23,304)

(16.9)%

134,043

136,660

(2,617)

(1.9)

%

Distribution Services

188,723

241,883

(53,160)

(22.0)%

276,101

288,278

(12,177)

(4.2)

%

Total EMEA

$

1,012,592

$

1,189,274

$

(176,682)

(14.9)%

948,207

947,220

987

0.1

%

Net Sales

Pounds Sold

Nine months ended May 31,

USCAN

2015

2014

$ Change

% Change

2015

2014

Lbs. Change

% Change

(In thousands, except for %'s)

Custom Performance Color

$

31,524

$

24,374

$

7,150

29.3

%

10,742

7,647

3,095

40.5

%

Masterbatch Solutions

119,514

95,464

24,050

25.2

%

160,352

145,813

14,539

10.0

%

Engineered Plastics

140,840

91,215

49,625

54.4

%

89,950

58,648

31,302

53.4

%

Specialty Powders

71,574

77,780

(6,206)

(8.0)

%

111,383

119,384

(8,001)

(6.7)

%

Distribution Services

51,769

47,444

4,325

9.1

%

56,487

49,845

6,642

13.3

%

Total USCAN

$

415,221

$

336,277

$

78,944

23.5

%

428,914

381,337

47,577

12.5

%

Net Sales

Pounds Sold

Nine months ended May 31,

LATAM

2015

2014

$ Change

% Change

2015

2014

Lbs. Change

% Change

(In thousands, except for %'s)

Custom Performance Color

$

3,457

$

2,905

$

552

19.0

%

1,347

1,271

76

6.0

%

Masterbatch Solutions

65,971

70,628

(4,657)

(6.6)

%

46,316

46,272

44

0.1

%

Engineered Plastics

34,857

38,116

(3,259)

(8.6)

%

25,775

26,894

(1,119)

(4.2)

%

Specialty Powders

27,850

37,099

(9,249)

(24.9)

%

23,456

31,717

(8,261)

(26.0)

%

Distribution Services

N/A

N/A

Total LATAM

$

132,135

$

148,748

$

(16,613)

(11.2)

%

96,894

106,154

(9,260)

(8.7)

%

Net Sales

Pounds Sold

Nine months ended May 31,

APAC

2015

2014

$ Change

% Change

2015

2014

Lbs. Change

% Change

(In thousands, except for %'s)

Custom Performance Color

$

8,500

$

2,149

$

6,351

295.5

%

5,809

1,700

4,109

241.7

%

Masterbatch Solutions

61,038

61,681

(643)

(1.0)

%

60,900

55,126

5,774

10.5

%

Engineered Plastics

79,196

69,085

10,111

14.6

%

55,809

45,381

10,428

23.0

%

Specialty Powders

8,661

11,111

(2,450)

(22.1)

%

9,084

10,074

(990)

(9.8)

%

Distribution Services

863

1,315

(452)

(34.4)

%

1,062

1,622

(560)

(34.5)

%

Total APAC

$

158,258

$

145,341

$

12,917

8.9

%

132,664

113,903

18,761

16.5

%

    

Net Sales

Pounds Sold

Three months ended May 31,

Consolidated

2015

2014

$ Change

% Change

2015

2014

Lbs. Change

% Change

(In thousands, except for %'s)

Custom Performance Color

$

45,305

$

50,212

$

(4,907)

(9.8)%

18,408

16,973

1,435

8.5

%

Masterbatch Solutions

187,927

202,273

(14,346)

(7.1)%

196,588

182,775

13,813

7.6

%

Engineered Plastics

181,725

195,661

(13,936)

(7.1)%

132,495

124,299

8,196

6.6

%

Specialty Powders

71,133

97,121

(25,988)

(26.8)%

90,354

104,253

(13,899)

(13.3)

%

Distribution Services

74,768

100,468

(25,700)

(25.6)%

107,261

116,954

(9,693)

(8.3)

%

Total Consolidated

$

560,858

$

645,735

$

(84,877)

(13.1)%

545,106

545,254

(148)

%

      

Net Sales

Pounds Sold

Nine months ended May 31,

Consolidated

2015

2014

$ Change

% Change

2015

2014

Lbs. Change

% Change

(In thousands, except for %'s)

Custom Performance Color

$

136,649

$

140,918

$

(4,269)

(3.0)

%

52,650

47,704

4,946

10.4

%

Masterbatch Solutions

568,408

564,750

3,658

0.6

%

563,775

509,996

53,779

10.5

%

Engineered Plastics

549,072

559,399

(10,327)

(1.8)

%

378,638

353,334

25,304

7.2

%

Specialty Powders

222,722

263,931

(41,209)

(15.6)

%

277,966

297,835

(19,869)

(6.7)

%

Distribution Services

241,355

290,642

(49,287)

(17.0)

%

333,650

339,745

(6,095)

(1.8)

%

Total Consolidated

$

1,718,206

$

1,819,640

$

(101,434)

(5.6)

%

1,606,679

1,548,614

58,065

3.7

%

     

A. SCHULMAN, INC.

SUPPLEMENTAL SEGMENT INFORMATION

(continued)

Three months ended May 31,

Nine months ended May 31,

2015

2014

2015

2014

Unaudited

(In thousands, except for %'s)

Segment gross profit

EMEA

$

51,695

$

56,798

$

145,908

$

156,237

USCAN

22,104

23,791

66,478

50,911

LATAM

9,324

4,472

22,075

20,011

APAC

7,771

7,052

22,403

20,202

     Total segment gross profit

90,894

92,113

256,864

247,361

Inventory step-up

(341)

(1,199)

Accelerated depreciation, restructuring and related costs

(78)

(149)

(674)

(791)

Costs related to acquisitions and integrations

(59)

(174)

     Total gross profit

$

90,757

$

91,964

$

255,675

$

245,371

Segment operating income

EMEA

$

24,716

$

23,565

$

61,032

$

61,537

USCAN

7,982

11,906

25,299

18,603

LATAM

4,654

(649)

7,531

6,286

APAC

3,972

3,328

10,903

9,870

Total segment operating income

41,324

38,150

104,765

96,296

Corporate

(8,502)

(9,752)

(24,992)

(24,149)

Costs related to acquisitions and integrations

(3,590)

(888)

(7,972)

(3,377)

Restructuring and related costs

(5,937)

(2,160)

(15,303)

(8,322)

CEO transition costs

(6,167)

Asset impairment

(104)

Accelerated depreciation

(29)

(327)

(108)

Inventory step-up

(341)

(1,199)

Operating income

23,266

25,350

49,663

59,037

Interest expense

(2,618)

(1,433)

(7,288)

(6,112)

Bridge financing fees

(18,750)

(18,750)

Foreign currency transaction gains (losses)

(857)

28

(3,097)

(2,120)

Other income (expense), net

335

64

900

478

Gain on early extinguishment of debt

1,290

Income from continuing operations before taxes

$

1,376

$

24,009

$

22,718

$

51,283

Capacity utilization

EMEA

90

%

87

%

84

%

84

%

USCAN

61

%

67

%

63

%

62

%

LATAM

76

%

68

%

71

%

76

%

APAC

67

%

73

%

65

%

71

%

Worldwide

76

%

77

%

73

%

74

%

       

SOURCE A. Schulman, Inc.



RELATED LINKS

http://www.aschulman.com